Pelosi and McConnell Clash Over Coronavirus Stimulus

By Yuval Rosenberg

Pelosi and McConnell Clash Over Coronavirus Stimulus

The election may have changed the political landscape in
Washington, D.C., but even before the results are final,
congressional leaders and the Trump administration signaled Friday
that one thing hasn’t changed: the partisan stalemate surrounding
another coronavirus stimulus bill.

Senate Majority Leader Mitch McConnell (R-KY) again called for a
smaller, targeted relief package, saying that the October jobs
report released Friday — which showed that the unemployment rate
had fallen to 6.9% — indicated that narrow legislation is all
that’s needed. (See below for more on the jobs report.)

“Our economy is really moving to get back on its feet. That I
think clearly ought to affect what size of any rescue package we
additionally do,” McConnell
said at a news conference in Kentucky. “I do think
we need another one, but I think it reinforces the argument that
I’ve been making for the last few months that something smaller —
rather than throwing another $3 trillion at this issue — is more
appropriate, with it highly targeted towards things that are
directly related to the coronavirus, which we all know is not going
away until we get a vaccine.”

White House economic adviser Larry Kudlow said Friday that,
given stronger-than-expected economic data, the Trump
administration — which had shifted positions over weeks of
negotiations on another stimulus bill, sometimes from one day to
the next — would oppose a package along the lines of the roughly $2
trillion deal that Treasury Secretary Steven Mnuchin had been
negotiating with House Speaker Nancy Pelosi (D-CA).

“We’re not interested in, you know, two or three trillion,”
Kudlow
said, calling instead for a “targeted package to
specific areas.”

Pelosi has for months rejected that approach, and she did so
again on Friday. “It doesn’t appeal to me at all because they still
have not agreed to crush the virus,” Pelosi said, adding, “that
isn’t something we should be looking at.”

In a statement,
the speaker said that the economic data and the surge in
coronavirus cases called for a more comprehensive response: “With
millions more Americans stuck in long-term unemployment, a million
fewer teachers and education jobs compared to a year ago, nearly 8
million people having fallen into poverty and up to 17 million
children food insecure, we must crush the virus and protect the
lives and livelihoods of the American people.” She called for
Republicans to return to the negotiating table.

What’s next: With lawmakers set to return to the capital
next week for a lame-duck session of Congress, the Trump
administration is indicating that it will let McConnell be the
point person for negotiations with Pelosi rather than have Mnuchin
resume talks, The Washington Post’s Erica Werner
reports. McConnell said this week that he could
back some aid to state and local governments, a Democratic demand
that had been a major sticking point in Pelosi’s negotiations with
the administration.

“But with McConnell and Pelosi so far apart at the outset, it’s
unclear where compromise might lie — and highly uncertain what
Trump might be willing to sign on his way out of office,” Werner
writes. “The negotiations might hinge in part on a Dec. 11 deadline
when government funding runs out and a new spending bill will have
to pass to avert a government shutdown.”

Election uncertainty may still loom over any talks, too. While
Republicans appear likely to keep control of the Senate, Democrats
still have a chance to wrest it away, depending on the outcome of
two January runoff elections in Georgia. Those races, and the
prospect that Joe Biden will be inaugurated in late January, may
make Democrats less likely to compromise with McConnell during the
lame duck.

Pelosi announced that she’s running for another term as speaker
and she told reporters Friday that she saw her leverage in
coronavirus relief talks increasing, rejecting that idea that the
election would force Democrats to swallow a narrower bill. “She
exuded confidence in a Biden presidency, telling reporters once
he’s inaugurated he would be able to use the bully pulpit to
shepherd a large spending bill that includes infrastructure
construction -- even through a Senate continuing under Republican
control,” Bloomberg News
reports.

“The public wants a big jobs bill,” Pelosi reportedly said. “Now
we have the upper hand.”

Republicans obviously see it much differently.

Number of the Day: 121,888

One day after the U.S. hit 100,000 new coronavirus cases,
the nation surged well past that milestone, with
more than 121,000 new infections on Thursday.
“This virus doesn’t care if we voted for Donald Trump, doesn’t care
if we voted for Joe Biden,”
said Gov. Mike DeWine of Ohio, which also set a
new record for cases Thursday. “It’s coming after all of
us.”

Unemployment Rate Falls to 6.9% as US Reclaims Half the Jobs
Lost to Coronavirus

The U.S. economy added 638,000 nonfarm jobs in October and the
unemployment rate fell a full percentage from the month before,
down to 6.9%, the Department of Labor
announced Friday.

“These improvements in the labor market reflect the continued
resumption of economic activity that had been curtailed due to the
coronavirus (COVID-19) pandemic and efforts to contain it,” the
department said. “In October, notable job gains occurred in leisure
and hospitality, professional and business services, retail trade,
and construction. Employment in government declined.”

Some good news: The results point to a
stronger-than-expected economy in October. “Progress in the U.S.
labor market is holding up as household savings help fuel spending
and business investment rebounds, putting the economy in better
shape than many analysts expected just six months ago,” Bloomberg’s
Katia Dmitrieva
wrote.

Economist Tim Duy
noted that the labor force participation rate rose in
October, another sign that the economy continues to strengthen.
Although Congress cut off a firehose of fiscal support in the form
of enhanced unemployment benefits three months ago, “the labor
market doesn’t seem to notice,” suggesting that demand will
continue to grow, even without additional federal help.

Some bad news: Other experts were less optimistic,
finding signs of weakness despite the solid topline numbers.
“Today's jobs report shows that our recovery is losing momentum,”

wrote Ernie Tedeschi of the research firm Evercore ISI.
“Every month since July has seen successively slower growth, and
slower growth raises the risk that we get knocked down by adverse
circumstances.”

Bloomberg’s Dmitrieva pointed out the big increase in the number
of long-term unemployed, which increased by more than a million to
3.56 million. About one third of the roughly 11 million unemployed
workers in the U.S. have been out of work for more than six months,
and their number is growing rapidly.

And the sheer number of unemployed workers is still
overwhelming. Economist Heidi Shierholz of the Economic Policy
Institute
noted that the economy is still roughly 10 million jobs
shy of the employment level in February, before the pandemic took
hold. About 1.3 million of those lost jobs are in state and local
governments, mostly in education.

A long road back: Economist Jason
Furman — who
argues that a more “realistic unemployment rate”
that takes into account classification errors and changes in the
labor force participation rate would register 8.4% in October —
said Friday that the latest report “is consistent with a ‘partial
bounce back’ in the labor market, as the unemployment rate falls
quickly at first, followed by a ‘slog’ where the unemployment rate
slowly falls but remains at an elevated level for a prolonged
period.” The bounce back could take a long time, Furman said,
especially as the coronavirus continues to depress economic
activity for the foreseeable future.

Chart of the Day: An Uneven Recovery

The coronavirus recession has been particularly hard on
low-income workers. “The recession is basically over for high
earners,” says NPR’s Planet Money, which posted this chart showing
unemployment levels for different income groups to
Instagram Thursday, before the latest jobs report. “But
for folks with lower incomes, unemployment has hit Depression-era
levels.”

One Big Election Winner: The Health Care Industry

Whatever the result of the presidential election, it looks like
divided government is a near certainty, and that’s good news for
what Bloomberg’s Max Nisen calls “the health care industrial
complex.”

“Big pharma and health insurers are the real winners of the 2020
election,” Nisen
says in an opinion piece Thursday. “Anyone who has
to interact with and pay for care in America has less to
celebrate.”

Nisen notes that the stocks of health insurers and
pharmaceutical firms have been soaring since Election Day as
traders digest the results. Divided government means one of the
biggest threats to health care profitability — namely, coordinated
political action to reduce costs throughout the health care system
— is looking far less likely than it did before the election, when
many prognosticators were predicting a “blue wave” that would give
Democrats full control in Washington.

Now, facing a Senate that is expected to be controlled by
Republicans, it’s unlikely that a potential Biden administration
would be able to sign any major health care changes into law as the
upper chamber blocks significant reforms.

Trump’s legacy: The Trump years have been very good for
the health care industry, Nisen says: “There was limited change
under Trump. He failed to repeal the Affordable Care Act, and
executive actions aimed at reining in drug prices and increasing
health-cost transparency have had little effect if they've been
implemented at all. His legacy is mostly a modest jump in the
number of Americans without health coverage resulting from efforts
to undermine the ACA and Medicaid, a mismanaged pandemic, and a
bunch of lawsuits.”

Health care profits growing: “The past
few years under President Donald Trump have shown how much money
the industry can make from America's health-care status quo,” Nisen
writes. “Annual gross profit at the 25 most valuable health
companies jumped by about $80 billion over the first three years of
his term to more than $650 billion. Its profit now seems likely to
expand even further for the next few years. Great for investors, if
not so much for the broader population and health-care system as a
whole.”

Threat neutralized: Joe
Biden’s proposals include a public option for health insurance and
drug-price negotiating power for Medicare, but those are probably
off the table now. “There's only so much Biden could accomplish
with executive action,” Nisen says. “Many of his efforts would aim
to undo Trump's damage, which might even benefit health companies.
He would likely take a harder line on health-care antitrust issues,
but if that's the biggest problem, the sector as a whole will be
delighted.”
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